Modern Times Group Profit Rises on Eastern Expansion

Modern Times Group AB (MTGB), Sweden's largest publicly traded media company, said first-quarter profit rose 27 percent as it expanded in eastern Europe.

Net income rose to 387 million kronor ($65.9 million) from 305 million kronor a year earlier, the Stockholm-based company said today in a statement. Sales climbed 16 percent to 3.04 billion kronor. Analysts had predicted profit of 372 million kronor on sales of 2.9 billion kronor, the averages of seven estimates compiled by Bloomberg.

Modern Times, which has expanded in the Czech Republic, Russia and Slovenia, is exploring additional purchases in eastern Europe and Africa. The company wants to buy assets in the range of $5 million and $100 million, Chief Executive Officer Hans- Holger Albrecht said in a telephone interview today.

``Central and eastern Europe is growing tremendously,'' said Alexander Wisch, an analyst at Standard & Poor's Equity Research in London. He recommends buying the stock.

Sales in central and eastern Europe grew 38 percent, while operating profit increased 29 percent in the quarter.

``Eastern Europe will grow on a similar level'' for the rest of the year, Albrecht said. ``All countries did really well. The Czech Republic was a bit ahead of expectations.''

Modern Times fell 1.50 kronor, or 0.4 percent, to 422.50 kronor in Stockholm. The stock has fallen 7.1 percent this year.

CTC Gain

The company completed the sale of Russian television network DTV Group to CTC Media Inc. for about $395 million in cash earlier this month. The sale will result in a net gain of about 1.9 billion kronor in the second quarter, the company said. Modern Times holds 39.5 percent of CTC Media.

At the Scandinavian free-TV division, sales rose 13 percent to 808 million kronor, while operating earnings jumped 37 percent, Modern Times said.

The advertising ``market has been a bit slower'' in the first quarter, Albrecht said in the interview. ``We don't see any major impact of an economic slowdown.''

``In Scandinavia, free-to air is not doing too badly, better than anyone had expected,'' Standard & Poor's Wisch said. ``It's an amazing performance, given the slowdown.''

Operating profit at the pay-TV division increased 6 percent to 157 million kronor, while sales gained 11 percent to 975 million kronor.

To contact the reporter on this story: Maria Fredriksson in Stockholm at mfredriksson@bloomberg.net

To contact the editor responsible for this story: Lars Klemming at lklemming@bloomberg.net

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